Post a Comment On: Richard Sprague

New York magazine puts a few economists on the trail of various small businesses in Manhattan to identify their business models and see exactly how much money they make. A private school earns a 10% profit on revenues, with about 54% of its revenue spent on salaries. Cab drivers make only about $12K profit per year. Discount stores (like Jacks 99 cent stores, or presumably like the Japanese dollar store in Seattle) earns $7M profit on $30M revenue for three stores.  Their costs are low because they procure goods that are essentially dumped on them for pennies by manufacturers who need to get rid of stuff. Good sushi restaurant in a good location, serving 250 meals per day, earns $8.5M, of which $1.7M is profit. Most restaurants (like small pizzarias) make about 10% profit. Yoga studios make $77K, with $24K in losses, so most are out of business within three years.  If you're an instructor thinking of starting a studio, it's much better to do private lessons instead. Some other rules for starting a small business:  rent for a bar should be no more than your Friday night take and a restaurant's should be about one week's revenue.